skip to Main Content

May 15, 2020

  • FinCEN Director Blanco Applauds FAFT Travel Rule and Expresses Intent to Enforce Regulations Against Foreign Unregistered MSBs
  • TRISA Announces Full Support for InterVASP’s IVMS101 Travel Rule Message Standard
  • Dave Jevans Shares Perspective on Blockchain Forensics, CBDCs, and Travel Rule Compliance
  • Proper Crypto AML Helps Stop Flow of $5 Million in Stolen Funds
  • Perpetrators of $15 Million Cryptocurrency and Binary Options Scheme Face CFTC Charges

FinCEN “Serious About Enforcing Cryptocurrency Regulations”

On May 13, crypto legal and regulatory experts from around the world gathered at the Consensus: Distributed virtual conference to discuss how ready crypto is for the Travel Rule. In his keynote presentation, FinCEN Director Kenneth Blanco touched on criminals undermining customer due diligence and the importance of the Travel Rule for global AML/CTF.

Blanco also applauded the steps taken by the FATF to adopt an International Standard for crypto AML, stating that “any asset that allows the instant, anonymized transmission of value around the world with no diligence or record keeping is a magnet for criminals, including terrorists, money launderers, rogue states, and sanctions evaders.” Blanco further added how FinCEN is “optimistic about the growth of various cross-sector organizations and working groups focusing on developing international standards and solutions addressing the Travel Rule.”

However, Blanco ended his discourse with a more ominous tone, reiterating FinCEN’s stance that the United States maintains that the Travel Rule has applied to VASPs for years and continues to expect any VASP operating in the United States or with US persons to understand who is on the other side of a transaction. Blanco also stated that FinCEN will be taking a close look at the AML/CFT controls in place for anonymity-enhanced cryptocurrencies such as Monero and Zcash and stressed that others should do the same.

According to Blanco, FinCEN is increasingly concerned with the fact that businesses located outside the US continue to do business with US persons without complying with US AML regulations. Blanco ended the keynote by declaring that FinCEN is serious about enforcing US regulations, “including against foreign businesses operating in the United States as unregistered MSBs.”


Travel Rule Interoperability Takes Major Step Forward with TRISA Support for IVMS101 

Just a week after the Joint Working Group for InterVASP Messaging Standards (JWG) ratified the IVMS101—a universal common language for communicating required beneficiary and originator information between VASPs—TRISA announced full support for the JWG’s Travel Rule Message Standard.

IVMS101 is the first technical standard issued by InterVASP’s Joint Working Group, an effort led by GDF, IDAXA and the Digital Chamber of Commerce and with more than 130 technical subject matter experts. It covers important data level compatibility issues, specifically establishing a universal lexicon, describing the data model, defining constraints over the data, and delivering a model that is fit for global use. This foundational integration helps bridge multilingual boundaries, closing the gap between regions. According to the IVMS white paper, this unambiguous data allows VASPs to exchange messages in an automated fashion, reducing costs and minimizing risks.

Read the full announcement from the JWG:

Read the standard:


Dave Jevans Participates in Three Consensus 2020 Virtual Sessions

On May 11th, Coindesk kicked off the first virtual version of its annual Consensus conference. CipherTrace CEO Dave Jevans presented on three key sessions, sharing his perspective on blockchain forensics, central bank digital currencies, and the Travel Rule.

During Beyond Tainted Coins – the Future of Onchain Forensics, Dave shared the screen with leadership from other blockchain forensics firms. Dave emphasized the need to preserve privacy while achieving compliance and preventing money laundering, sanction evasion, and terrorist financing, and explained that even the most ardent privacy advocates understand there is a reasonable balance between consumer privacy and the reality of regulation.

Dave had the last word of the session with his prediction that every country will issue a digital currency in the next ten years.

During The Future of Fiat: Central Bank Digital Currencies Workshop, Dave spoke alongside Sheila Warren of the World Economic Forum and Ken Timsit of Consensys. One highlight from this session was Dave’s insight that it would be much more effective for central banks to issue digital currencies initially in a debit card format, rather than assuming everyone has a hundred dollar smartphone. Dave also emphasized that the current pandemic has shed light on the need for contactless currency, as a touch-free payment solution may have helped to mitigate the spread of COVID-19. Ultimately, central banks need to consider the trifecta of security, privacy, and compliance.

Is Crypto Ready for the Travel Rule aired on May13th with Shyft, CoolBitX, Netki, and Bitcoin Suisse/OpenVasp joining Dave on-screen. Dave presented TRISA as a Travel Rule solution for VASPS that is open-source and focused on privacy and data security. During the Q&A, Dave explained the Sunrise Problem, wherein regulations will arise at different times around the world (just like the sun), and it will take years for each regulation to be enacted equally everywhere.

Read Dave’s take on privacy and the blockchain:

Read about CipherTrace’s recently announced CBDC initiative:

For more information on TRISA:


Crypto Exchanges Help Stop Bank Robbers from Cashing out $5 Million in Stolen Funds

On May 8th, Decrypt reported on an online bank heist that occurred last month in Brazil in which $5 million in stolen funds were used to buy bitcoin, but OTC exchanges were able to quickly block the funds and stop the criminals from cashing out.

It was difficult for investigators to uncover how the theft happened, but according to an internal investigation, all transactions were made from the same IP address and the fraud had been pre-planned with the usual transaction limits lifted six days prior. The investigation sent to the Public Prosecutor articulated, “It is as if a corporate bank account had invaded another corporate bank account for the order to debit the bank.”

Why It Matters: The fact that local exchanges were able to flag the attempted transaction requests made by the criminals and notify banks is a testament to what well-executed AML compliance measures can achieve when it comes to preventing criminals from making off with stolen assets.

Read the full Decrypt story:


Executives of American and Israeli Firms Charged for Executing $15 Million Dollar Crypto and Binary Options Scam

According to a Cointelegraph article published on May 7th, the Commodity and Futures Exchange Commission (CFTC) is charging executives of “Israel-based Tal Valariola and Itay Barak of Digital Platinum Limited for aiding the United States-based firm All In Publishing (AIP) to create and promote numerous misleading investment schemes to U.S. and foreign investors.”

The defendants allegedly spent an estimated $50,000 to create slick videos of customer success stories, which were used to prompt 51,917 users to open binary options accounts and 8,043 users to open digital asset trading accounts. The digital marketing campaigns utilized “at least five email auto-responders, each with a database of approximately 200,000 emails.” Ultimately, the perpetrators were caught and now face charges on four counts, including options fraud and CTA fraud.

Why It Matters: Cryptocurrencies are still used as shiny objects to entice victims into participating in scams. The fraud perpetrated by All in Publishing and Digital Platinum Limited is yet another example of the ongoing need for smart regulation.

Read the full Cointelegraph story:

Read the full complaint: 

Back To Top